A key gauge of consumer sentiment ticked lower in June, missing analysts’ estimates as survey participants lowered their growth prospects for the national economy in the wake of tariffs on Chinese exports and a softening in employment growth.
The University of Michigan’s preliminary consumer sentiment index, which is widely viewed as an indicator of the future course of the national economy, posted a reading of 97.9 this month, down from 100 in May and below the consensus estimate of analysts polled by Econoday for 98.4.
“In early June, consumer sentiment reversed the May gain due to tariffs as well as slowing gains in employment,” Richard Curtin, surveys of consumers chief economist at the University of Michigan, said. “Some of the decline was due to expected tariffs on Mexican imports, which may be reversed in late June, but most of the concern was with the 25% tariffs on nearly half of all Chinese imports. Consumers responded by lowering growth prospects for the national economy, and as a consequence, reduced the expected gains in employment”
Curtin added that the survey results had shown that consumers now anticipate an average long-term inflation rate of 2.2%, which is the lowest rate the university’s surveys have recorded since the question was introduced 40 years ago.
The sole component of the headline index that improved in early June was buying plans for large household durables, the report stated. That improvement, however, was due to consumers favoring tariff induced buy-in-advance price rationales.
A sub-index from the University of Michigan, which assesses current conditions rose to 112.5, up from 110 in May while a measure of expectations moved lower, to 88.6 from 93.5 in May.